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What are the 2 types of contracts between the owner and the contractor?
1. Negotiated contracts
2. Bid contracts
Describe the 2 ways to notify prospective bidders of a project.
1. Advertisement for bids - project and bidding info is published in newspapers (usually required for public work)
2. Invitation to bid - project and bidding info is sent to prequalified bidders.
What 6 items are usually included in the bid documents?
1. the advertisement or invitation to bid
2. instructions to bidders
3. bid forms (so all bids are on the same form and so can be compared)
4. bid security information
5. requirements for a performance bond, if required
6. requirements for a labor and material payment bond, if required
What is typically included in the instructions to bidders?
1. how bids will be considered
2. bidder's representation (the bidder has read & understands the CD's and specs, has visited the site, etc)
3. bidding documents (plans, specs, any deposits required)
4. guidelines for submitting substitutions
5. description of any bonds
6. an article requiring the contractor to notify of any errors/inconsistancies in the CDs
7. Any addenda
8. Procedure for modification or withdrawal of bid
9. post-bid information
What is bid security?
Usually about 5% of the estimated cost of work.
The bidding contractor pays it to ensure that the successful bidder will enter into a contract with the owner.
What is a performance bond?
A statement by a surety company that obligates the surety company to complete constrction of the project should the contractor default on his/her obligations.
Usually around 3% of construction cost.
Is ultimately paid by the owner because it is included in the total amount of the contract price.
What is a labor and material bond?
It protects the owner if the contractor defaults on payments for labor and materials which could result in liens against the property or litigation by subcontractors and material suppliers.
When are unit prices used rather than a total price for a material?
When the full extent of the material is unknown, thus the price per square foot can be compared in bids.
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